Dear Boards of Directors and Chief Executive Officers:
The NCUA Board unanimously approved the agency’s 2024 operating and capital budgets at its December 2023 meeting. As a result of that decision and other factors, federal credit union operating fees will increase by an average of approximately 16.36 percent in 2024. Additionally, the operating fee exemption threshold was increased from $1 million to $2 million. Federal credit unions with a four-quarter average of $2 million or less in total assets are exempt from the operating fee.
The increase in the 2024 operating fee results from budgetary growth at the NCUA and the lack of a 2024 operating fee credit for unspent fees collected in past years. The 2024 operating fee is based on the NCUA’s operating and capital budgets, which grew approximately 7 percent combined, between 2023 and 2024. The NCUA applied credits to the operating fee charges for 2022 and 2023 for the fees it collected but did not spend in 2021 and 2022, largely because of reduced travel spending during the COVID-19 pandemic. Travel-related spending increased in 2023, and the NCUA ended the year without sufficient balances to provide a credit to the 2024 operating fee.
The enclosed 2024 Operating Fee Schedule will help calculate the exact amount of your credit union’s 2024 operating fee. The enclosure includes a web link to the NCUA’s online calculator. In March 2024, the NCUA will provide individual invoices with the specific dollar amount for each credit union’s operating fee. If your credit union owes an operating fee, it is due no later than Thursday, April 18, 2024.
The remainder of this letter provides additional information about the operating fee and payment options.
Why was the exemption threshold changed in 2024?
The NCUA Board unanimously approved the new operating fee methodology at its December 2023 meeting. The exemption threshold was updated from $1 million to $2 million as part of this revised methodology. Federal credit unions with a four-quarter average of $2 million or less in total assets are exempt from the operating fee. Since the last time the exemption threshold was adjusted, total assets have approximately doubled across federal credit unions. The operating fee methodology was adjusted to keep pace with this growth and provide additional relief to the smallest federal credit unions.
Are 2024 operating fees reduced by crediting fees paid in past years?
There is no credit for past years’ collections applied to 2024 operating fees. The NCUA Board approved $15 million credits against the 2023 and 2022 operating fees primarily because the COVID-19 pandemic lowered agency travel expenditures. The agency’s operating cash balances in 2023 did not reach a level that would result in providing a credit toward 2024 operating fees.
What is the timeline for operating fee and Share Insurance Fund invoices?
Your federal credit union’s 2024 operating fee will be based on a four-quarter average of total assets reported as of September 30, 2023; June 30, 2023; March 31, 2023; and December 31, 2022. In March 2024, federal credit unions with four-quarter average total assets greater than $2 million will receive an invoice for their 2024 operating fees. Federal credit unions with a four-quarter average of $2 million or less in total assets are exempt from paying the operating fee.
Concurrently, all NCUA-insured credit unions will be notified of any adjustments needed to maintain their Share Insurance Fund capitalization deposits at one percent of insured shares, as required by the Federal Credit Union Act. Your credit union’s capitalization deposit may be adjusted up or down based on insured shares reported as of December 31, 2023.
For federal credit unions, the NCUA will combine your operating fee and capitalization deposit adjustment into a single invoice. Payment is due no later than April 18, 2024.
How do I make the payment to the NCUA?
You are encouraged to participate in the Pay.gov (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) direct debit program. To enroll, please complete the Authorized Electronic Transfer Payments form, which can be found on ncua.gov, and email the form to firstname.lastname@example.org. Once enrolled, you will continue to receive invoices by mail. Payments will be drafted automatically on the due date; no further action is required.
If you do not participate with the Pay.gov (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) direct debit program, you must submit payments to the NCUA in accordance with the instructions provided with the invoice and no later than April 18, 2024.
How does the Overhead Transfer Rate affect the Operating Fee?
For 2024, the Overhead Transfer Rate (OTR) decreased to 61.7 percent, a change of 70 basis points compared to the 62.4 percent level in 2023. Each year, the NCUA uses the OTR to determine how much of the NCUA’s operating budget is funded by the Share Insurance Fund. The OTR is derived from estimates of the NCUA’s resources that will be used for insurance-related functions. Generally, if the OTR decreases, the operating fee revenue collected from federal credit unions increases, and vice versa. Additional discussion of the OTR and detailed information about the NCUA budget are available on the Budget and Supplementary Materials page of the NCUA website.
If you have any questions about your credit union’s operating fee, please contact the NCUA’s Office of the Chief Financial Officer at email@example.com.
Todd M. Harper